Saturday, 15 April 2017

Some Thoughts Over New GST Acts Passed - Series 1

GST Act was
passed in Lok Sabha on 22.3.17 and subsequently in Rajya Sabha andgot President’s assent.Apart from this, the SGST has to pass through
the series of steps for its passing by the majority of State Governments for it
become Law and all the formalities shall have to be completed before 30th
June 2017 to enter the new GST era. In the meantime, the Council has to decide
on the threshold limits, exemptions etc.

This
is the third time an Bill is doing the rounds in the field, ( 1st
one in May 2016, Second one Nov.2016 and now the one passedin Parliament in March 17 )
sending the learned and the layman, pandit and pedestrian into a maze, in all its avatars.Every time it takes a new Avatar, it brings
with it new changes in the form of knives wrapped in cotton gloves. Herein, I
make some attempt to identify and highlight some of the knives, which would
require a departure from the beaten Excise and Service Tax rules mandated and
followed so far.

SOPS OFFERED WITH NEAR IMPOSSIBLE
CONDITIONS TO FULFIL

Though, it is
stated that there is threshold exemption to small scale sector in goods and services,
Government has devised a strategy or mechanism so as to make the small time tax
payers to clearly opt out of the exemption carrot offered in the Statute book.

Section 9(4) of the present Act says when the
goods and services are received from unregistered players by the Registered
persons, the Registered persons are liable to pay the GST on Reverse Charge
basis.Thus by this way, the Govt wants
to ensure all the goods and services both supplied and received by the
registered persons are GST suffered, thus bringing the GST cycle complete.But what is lost sight is that it will serve
as a disincentive for an unregistered person to supply the goods or services or
both to the registered person.Which
Registered person will be ready to chase the unregistered supplier only to take
the responsibility of paying the taxes on his behalf?

Think of a
big industry purchasing provisions for canteen needs and stationery from small
shops to meet its sundry needs.Surely,
they are likely miss out something, for which the Audit people will come with
big lens to catch only to slap Tax and interest and penalty liability at a
later date. We will surely live to witness such dramas in future.Aache Dins aane walah hai!

Thus it is
the other way of bringing all the people to fall in line. It is another game by
the Government to show on book that there are threshold exemptions but in
reality hurdles are put in place to frustrate the enjoyment of the same it by the exemption aspirants. So the
unregistered persons are to limit their transaction within the unregistered
persons’circle.However, the registered
persons are to suffer in case they go in for purchase from unregistered sector.

WOES OF UNREGISTERED PERSONS CONTINUE

If you think
only the Registered persons are the only one to bear the cross on behalf of the
unregistered persons, you are wrong.We
won’t spare unregistered persons easily either.An unregistered person has to be very watchful to ensure that his
supplies are always within the same state.In case he makes any single supply to a person whether registered or not
in another state, he is liable for paying IGST on forward basis.Even for making for one supply you have to
take out GST registration, file multiple returns, pay the taxes on due
dates.Consequences of failure to notice
any such inter state supply will be a subject of different tragic story!So small time players – beware you may
continue to enjoy the exemption benefits with the Swords of Damocles hanging
permanently over your heads.

EDUCATION THROUGH PRIVATE CHANNELS –
BOUND TO BE A COSTLIER AFFAIR

Under the GST
era all Kalvi thanthais ( Fathers of Education -an euphemism for Education hawkers )are to come under tax net. As on date all
education services other than ones of commercial nature are exempt.In GST regime, the exemption is restricted
only to education services by Government or local authority.Govt authority means Board or any authority
with 90% equity by Government.This
step, if I presume correct, is the right one to bring the illegal money into
legal circulation.Thus the
unwritten/undeclared capitals received from the innocent persons will be
subject to GST.A great step, but with
more pain to the education seekers.But
have heart, it will stop the accumulation of ill-gotten wealth which are the root
causes for all the illegal activities we notice in the country.

For the time
being I take leave for this week.Rest
of them in subsequent posts.

Dear friends, " Yenna kodumai ithu Saravanan" . You may be aware of this famous punch dialogue of blockbuster Chandram...

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About Shri.Venkatesan

I am a retired Assistant Commissioner of Central Excise with nearly four decades experience in Excise and Service Tax in all areas.The passion I had for Excise and Service Tax, drove me into penning more than 70 articles in law journals, conducting hundreds of classes and seminars to the officers and trade. Now the introduction of GST gives me a new window that makes me look into the new law from the prism of Excise and Service Tax with both +ive and -tive effects, Herein share my thoughts with you on the same from time to time.